It was bad enough that Standard and Poors screwed the world economy by recklessly giving AAA ratings to worthless mortgage backed securities without ever reviewing the underlying pool of loans. But now they’ve decided to play the role of “enforcer” in Wall Street’s latest gambit: forcing the sale of US assets in an austerity fire sale.

Fortunately Wall Street, having determined that they need another business besides owning zombie banks, is sitting there with a huge cash position just waiting for prices to drop. They’ve decided owning the crumbling US infrastructure is a good idea. No doubt they’ll soon be back for the money to refurbish it.

The entire deficit ceiling brouhaha is most certainly a manufactured crisis, but it’s a crisis with a purpose. And Standard and Poors is playing a critical role as the enforcer for the fire sale that Wall Street wants.

The International Organization of Securities Commissions (IOSCO) has a code of conduct that governs ratings agencies (CRAs). Section 1.14 states:

The CRA and its employees should not, either implicitly or explicitly, give any assurance or guarantee of a particular rating prior to a rating assessment. This does not preclude a CRA from developing prospective assessments used in structured finance and similar transactions.

The ratings agencies are supposed to be reactive, not proactive. Their job is to be neutral observers who assess risk based on the reality they are presented with.

Ratings Services and its Analysts shall not, either implicitly or explicitly, give any assurance or guarantee of a particular rating prior to the determination of the rating by the applicable rating committee. This does not preclude Ratings Services from developing prospective assessments used in structured finance and similar transactions

If Congress and the Administration reach an agreement of about $4 trillion, and if we to conclude that such an agreement would be enacted and maintained throughout the decade, we could, other things unchanged, affirm the ‘AAA’ long-term rating and A-1+ short-term ratings on the U.S.

Someone will have to explain to me how that does not constitute giving an “assurance or guarantee of a particular rating prior to the determination of the rating by the applicable rating committee.”

Having issued a negative outlook, Standard and Poors customarily resolves a credit watch report within 90 days. It is highly unlikely that Congress will pass the austerity package that has the $4 trillion price tag that Standard and Poors is demanding. As such, it leaves them almost no choice but to downgrade US debt.

But this is absolutely crazy. The market was up 2% last week. 10-year Treasuries are at 2.96%. There’s no difference between this week and last week in terms of the country’s deficit problem. This is about perception, and it doesn’t seem to even be about the perception of the actual market. It’s about the perception of someone at Standard and Poor’s. The rating agencies, which played a major role in the financial meltdown, has just up and put a gun to the head of the country and demanded austerity in the middle of a jobs crisis. Are you kidding me?

In slapping a price tag on their US debt rating of $4 trillion, Standard and Poor’s flagrantly violates both their own and the IOSCO’s code of conduct. They not only force states into a fire sale of public assets, they also force cuts to programs like Medicare and Social Security that Wall Street has been longing for.

A credit rating agency has no business doing this. Yet here is the ever-helpful Darryl Issa to back them up: “Until we stop spending more, we should be downgraded.”

So say goodbye to your zoos, your parking meters, your bridges and your schools. Your airports, your harbors and your highways. The American public has an enormous investment in these things. But just as certainly as James Duke’s tobacco trust forced farmers to sell tobacco for less than it cost to grow, just as Russia was forced to sell its airports to the oligarchs and Poland was forced to sell its factories, so our municipalities and states and the federal government itself will be “forced” by a manufactured crisis to sell our assets off to private equity firms who are licking their chops at the prospect of owning America outright.

If you’re not outraged you should be. What Debbie did to Dallas, Standard and Poors is doing to you.

S&P is just another tool of the Oligarchy. It is playing it’s scripted role in the impoverishment and enslavement of the working classes. There is gonna be a fight. And when it’s over there won’t be any S&P.

Begging for criminal prosecution (and yes the Patriot Act applies).
Section 1361 protects “any property” of the United States or an agency or department thereof, or any property being manufactured or constructed for the United States or an agency or department thereof, from willful depredation or attempted depredation. “Depredation” has been characterized as the act of plundering, robbing, pillaging or laying waste. United States v. Jenkins, 554 F.2d 783, 786 (6th Cir. 1977)http://www.justice.gov/usao/eousa/foia_reading_room/usam/title9/crm01666.htm

I should note that financial securities (such as T-bonds held by federal agencies and trust funds) are forms of intangible personal property.

The evidence was sufficient to show that Blount willfully injured government property. “Property” includes “anything of value, including real estate, tangible and intangible personal property, contract rights, choses-in-action and other interests in or claims to wealth….” Black’s Law Dictionary 635 (5th ed. abr. 1983) (citing Model Penal Code Sec. 223.0). The government’s claim to the harvest value of the trees in the Clearwater National Forest constituted a property interest. Thus, if an individual willfully does an act which is intended to cause a decrease in harvest value, intentional injury is done to government property.

Furthermore, section 1361 does not preclude liability for economic damage. See Magnolia Motor & Logging Co. v. United States, 264 F.2d 950, 953-54 (9th Cir.), cert. denied, 361 U.S. 815 (1959) (suggesting that diminishing the economic value of government property, along with physically damaging the property, is an injury under Sec. 1361). Damage to economic value, if willfully done, is therefore punishable under the statute. Thus, Blount’s lack of intent to injure the trees is immaterial; intent to decrease the economic value of the trees is sufficient to constitute intent to injure government property.http://ftp.resource.org/courts.gov/c/F3/35/35.F3d.572.93-30327.html

Just glad to see that some have read and can apply the pattern Naomi Klein lays out to our politics. The Condor has come home to roost. The
outlook is grim, the banksters have worked for decades to get us in this position, a manufactured disaster with a ready solution cooked up by the
“Chicago Boys”, pun at least implicit.

Not sure about anyone else but I thought this house of cards would have collapsed by now. Seems I am wrong, we have along way to go, and it is going to get more painful, and the rich will get even richer.

Does this not also shed light on the Obama administration’s abdication of its responsibility to hold the financial institutions to account for illegality, negligence and incompetence?

For so many of us, it was perplexing. It seems to becoming clear. It was a reciprocal arrangement. Banks and rating agencies get a pass, but only in return for future services – such as helping to create a new crisis that can be used to further neo-liberal/neo-conservative policy goals.

I watched a seminar Obama was giving to some university students where he said he was a “pretty liberal president, but you’d never know it reading the Huffington Post”. How he gets away with this liberal-pragmatist claptrap is a testament to the abject failure success of the corporate media to take care of our their own economic interests.

So, you bitch when S&P doesn’t do its job and give a red alert to the fact that CDOs were a house of cards, and now you’re bitching that S&P is doing its job by saying that unless we get the deficit under control we are in for a world of hurt.

Continuing to raise the debt ceiling without a reasonable plan to tame the deficit is the final straw & tipping point, the veritable canary in the coal mine.

Like it or not, we ALL – you, me, the states and the Federal givernment – need to live within our means. Now, I know that on this board that is seen as living within OTHER PEOPLE’s MEANS, but regardless, we can’t keep borrowing 40 cents for every dollar we spend.

It’s likely that a growing trend in the U.S. will be the kidnapping of the rich for ransom. The U.S. is morphing into a failed state, not unlike Mexico. Of course another growth industry will be private security companies.

I am genuinely curious if any states have similar statutes that a state Attorney General could file charges under seeing as Eric Holder has DOJ focused on spiked trees (see comment 8) instead of the spiked forest.

There will be a need for more prisons to house all the white collar criminals from Wall St. and the political parties. When they see the wrath of the people who have to live in the dystopia they want to shove down peoples throats they’ll be grateful for a cot and 3 squares a day rather than the alternative.

The International Organization of Securities Commissions (IOSCO)has a code of conduct that governs ratings agencies (CRAs)

Is this an organization that polices its members like medical associations do physicians for malpractice? Or do they have the real clout that could get Standard & Poors decertified from working in countries outside the US. We know that the US won’t punish them.

Moody’s has been acting as the good cop, but they have violated the same ethical standard by guaranteeing that it would not be as bad as Standard & Poors says.

Of course what do you expect from the market makers who want to communicate to the government without risking their investments in market uncertainty. You talk directly to the politicians and the you have your consigliere publicly talk to them.

Dayum – these thugs are good! Synchronized, frog-in-pot for years (quietly dying) following by lightning speed in the clean-up round. Seriously, I am impressed in a dismal way. The global elites whumped us solid. And we thought we were organizing and winning – ouch.

“…itwas bad enough that Standard and Poors screwed the world economy by recklessly giving AAA ratings to worthless mortgage backed securities without ever reviewing the underlying pool of loans. But now they’ve decided to play the role of “enforcer” in Wall Street’s latest gambit: forcing the sale of US assets in an austerity fire sale.

The downgrade of state bond ratings has already forced states to sell off their parks, zoos, airports and parking meters in order to meet their budgets. It increases their cost for borrowing money. And if they try to fund their pension funds, well that causes their credit ratings to be downgraded too. ..”

i’m glad to see these two sets of facts placed side-by-side.

may i suggest, in my unlawyerly ignorance, that standard & poor might be a good target for the application of that peculiar small section of the 14th amendment that forebids, sort-of, badmouthing u.s, govt debt?

it is also the case that the bond rating agencies work for money.

it seems reasonable to ask who might be “incentivizing” (horrible word) s&p to talk openly about downgrades prior to the fact:

u.s. govt officials, public or private corporation officials, very wealthy individuals…?

I have been thinking that this mess is evolving into a standoff that will determine who is in charge of the country. Don’t bet the wages on the Federal or state governments. The coup may be just around the corner.

I’m not sure I can keep up with this learning curve – so now they are going to own everything else as well?

I don’t mind (/s) them owning politicians, but gee, this land is our land. Gotta get my old guitar out of mothballs. It would seem the housing collapse was only the beginning. Gobble up those peas; the financiers are coming.

Oh dear, domestic tranquillity where hast thou gone? They don’t have all those think tanks for nothing.

I would like it if you could stop by my house. I would let you look around. If you see anything that belongs to you you could take it with you. And you could accuse me of living within other peoples means to my face.

The job of a credit rating agency is to assess if an entity can pay it’s bills. That’s it. There is no way anyone, even the most fanatic deficit hawk, could reasonably conclude that the US cannot pay its debts. It could raise the debt ceiling, or raise taxes, or just let the bush tax cuts expire. Wall street does not take the threat seriously or else the market would be careening. They are not. It’s like saying Microsoft is insolvent because they can’t find the checkbook.

old slow is right, this particular piece of hysteria is one of your most notable.

No, Jane. What Wall Street is saying is that they believe that a deal will get done. They can also turn on a dime as we get closer to the magic date and a deal is not done. They live on program trades and being the first ones out, unlike the retail customers/investors who will be left holding the bag if a deal fails to gel.

So they have little to worry about.

And if the debt ceiling is not raised, we can’t pay our bills. That’s the whole point of their negative watch.

What S&P has said is that long-term if we continue to outspend, we will face a devalued currency and rising interest rates, plus more draconian austerity measures. These impacts are ALL worse than trimming the budget now.

As Jane has been warning, the Democratic (and Republican) Congressional leadership in Washington is now carefully preparing the ground for Catfood Commission, Round Two, and clearly, with the details now out, this time they mean it.

The Barack Obama/Harry Reid/Nancy Pelosi/Mitch McConnell version (“the Joint Select Committee on Deficit Reduction”) is pending in the Senate now, and that’s where Social Security and other earned-benefit programs, plus tax expenditure and other tax reform, will be “on the table,” and will go under the knife, rather than in the now-pending $2.7 trillion of proposed downpayment cuts accompanying the Catfood Commission II proposal and the debt ceiling increase.

While substantively-meaningless “short-term” or “long-term” debt ceiling extensions are being publicly haggled over, as the convenient distraction that they are – and S&P engages in political demagoguery to help ramrod its favored backroom deal through the “Legislative” Branch – the Catfood Two mechanism for transacting the real business at hand is intended to quietly slip into law, with its grossly-undemocratic provisions for absolutely no amendments to the 12-member Joint Select Committee’s product from any other elected federal legislator in the House or Senate.

“tax expenditure” – implying that whenever the government lowers taxes, it is “spending” its own money. The opposite is true. Taxes are “spent” by individuals and corporations (actually all by individuals, but let’s not open up THAT can of worms).

“This isn’t just about them saying we should reduce the deficit,” she said, adding: “This is an excuse. The budget deficit is an excuse for the Republicans to undermine government plain and simple. They don’t just want to make cuts, they want to destroy. They want to destroy food safety, clean air, clean water, the department of education. They want to destroy your rights.”

That’s great, but she failed to mention that little matter of the Central Committee and Catfood II.

So, basically, on advice from S & P, a shill for the banking industry, Congress has parked America in the bad part of town (Wall Street) where banking industry thieves can strip it clean. A shining example of stewardship.

If the DOJ is the body charged with acting upon the charge of treason, we are SOL. It conspicuously looked away when Valerie Plame was outed during a time of war. It’s pretty interested in Bradley Manning though.

This is indeed outrageous. But you get what you pay for. The debt ceiling legislation was foolish. It is like telling everyone, “come get your money now bc once we hit the limit, we won’t pay anymore.” Indeed that is what the debt ceiling does. Until now everyone could sort of wink at it, but the politics in the country has changed, perhaps forever.

It is a foolish imposition on our sovereignty, just like the balance budget amendment also promises to be. We have placed ourselves in the same position as Greece, since we no longer control our currency, at the most crucial time – - to pay our bills. It is, how can I say it, idiotic, but we did it to ourselves and, if not for S&P, then someone else. S&P might just be trying to deliver the message from the wealthy as someone said. It says someone else is really running the government. We just think we do.

If there were not a debt limit, the CRA would be laughable to say they would downgrade the US debt. The US can pay any debt with no restrictions at any time, except in the face of the debt limit. And, hang on, once they pass the balanced budget amendment, we face the same thing, a self imposed restriction on the ability to fund government when it is most necessary. But, hey, most people think these things are good. After all families have budgets and limits on what they can do? The CRA tell them what to do as well. What a world to live in.

Andrew Jackson (perhaps apocryphally) said the trouble with corporations is that they don’t have a soul to damn or a body to kick. But that’s not 100% accurate.
Piercing the corporate veil describes a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders or directors. http://en.wikipedia.org/wiki/Piercing_the_corporate_veil

The US has always been somewhere between an oligarchy and a plutocracy. When those in charge of the system ran it off the rails from the late 1800s to the first few decades of the 1900s, there followed a slight readjustment that lasted for a couple of generations from the mid-’30s to the mid-’70s. Some, mainly white, working and middle class folks were so happy with this adjustment that the 1950s came to be the new Eden in the origin myth and The Greatest Generation the new Founding Fathers. Over the past thirty years, the ruling class has been working to return to the pre-war power imbalance. And the priests like Milton Friedman and his ilk yell at the middle and lower classes, “You fucks never had it so good!”

The takeover has been a long time in the works from big things like the destruction of unions and public transportation to the mundane like the destruction of public phones and drinking fountains (if corporations can get folks to pay $8 a gallon for bottled tap water . . .?).

We’ll see if this is the point where the frogs jump from the boiling water.

For anyone who’s interested, the House Rules Committee hearing, that will determine the floor parameters (number of hours to which debate will be restricted, number/content of allowed floor amendments, if any, and so on) for the consideration by the House of Speaker Boehner’s “Budget Control Act of 2011,” containing Catfood II, began at 3:00 p.m. Eastern, and can be viewed on-line here (see “Rules Committee Hearing on H.R. 2587 and S. 627″). The second bill the Committee will be considering – S. 627 – is the Boehner debt-limit deal.

Though the outcome is almost always a foregone conclusion in the Speaker-stacked House Rules Committee, sometimes better (more genuine and informative) debate about the measure at hand takes place there than on the House floor. The hearing should at least give us a sense of where various House committee chairs are coming down on the profoundly-undemocratic Boehner/Cantor plan.

Looking at the several conclusion this reports makes it would seem that the entire collapse was entirely caused by extreme avarice and deception and yet no real prosecutions or real reforms. And again here we are creating another bubble, “corporate profits are up” according to the president, and the back of the recession is broken.

My question to the commissioner is how much of a role do you think did rating agencies such as Moody’s and Morningstar play in propagandizing these faulty securities and what is really stopping them from doing it again, in particular when those same agencies have vested interest in the marketplace as well?

His response to me was:

“Sunlight is the best disinfectant and the report addressed their role in detail. Of course, additional remedial steps could be taken to address the conflicts inherent in the issuer pay model where the underwriters pay for the rating with the credit rating agencies bearing no financial responsibility in the event the securities they’ve rated AAA fail to perform as represented. The rating agencies did play a role in rating as AAA many securities that have since been downgraded to junk status. The rating as super senior of CDOs that were composed of the riskiest tranches of underlying mortgage-backed securities has always looked like alchemy, an attempt to convert lead to gold, which failed miserably and contributed greatly to the crisis.”

We are going to be ‘downgraded’ no matter what.
It is a tool of financial terror.
They used it against Iceland, even telling them they wouldn’t be able to buy food … but Iceland said NO to the banksters. They have had a tough time of it, but they are slowly recovering.

There is no easy painless way out of this mess.
That is the LIE that both political sides are promoting in one form or another.

But a lot of us know this is a lie and expect things to get worse, a whole lot worse, before they get better. Even if we would like to believe the lie that we can get out of our situation with some form of financial voodoo, we know that’s not going to happen. So we can’t take either side very seriously.

Ratings agencies and the IMF are financial terrorists. We’ve already been warned about them in the book Confessions of an Economic Hitman.

The fix is in then and they are using it for pressure.
Timothy Gietner as Secretary of the Treasury has authority over the IMF and put the nix on the hair cuts for the Irish “bail out” funds.

“The Chief Financial Officer of the government, the Secretary serves as Chairman Pro Tempore of the President’s Economic Policy Council, Chairman of the Boards and Managing Trustee of the Social Security and Medicare Trust Funds, and as U.S. Governor of the International Monetary Fund, the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, and the European Bank for Reconstruction and Development.”

The US has 3 times the quota of voting shares of any other member country.

We know they twist arms, The interfered with the Judiciary on torture/kidnapping and rendition investigations in Spain, Germany and to protect the only quasi-democracy in the Middle East for crimes against the Palestinians.

After the CDS fiasco I’m sure the Administration is hanging prosecution for that over the Raging agencies heads.

No one has a 1st Amendment right to falsely yell FIRE in a crowded theater or to question the validity of, of… I forget what, oh yes:

“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned…”

I am wondering at what point actual physical resistance will be necessary, as mentioned here and here. Will we resist the privateers when they buy in distress our very land from under us, or will we go quietly to the work farms and then to…? They take it step by step, two-three forward, one back, let us acclimate, then push again. The grand push is here, I suspect.

I think we really need to work on strengthen the Dem numbers in the Senate and House, but no Blue dog/CONservadem support, and get rid of Obama. Let the Reprobates take the blame in 2013-16 while we work to take back the Democratic Party to core liberal and progressive values. I am not sure this country can be saved, but another four years of this, with BO at the helm is certainly not going to do it.